Correlation Between Nufarm Finance and Qbe Insurance
Can any of the company-specific risk be diversified away by investing in both Nufarm Finance and Qbe Insurance at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Nufarm Finance and Qbe Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nufarm Finance NZ and Qbe Insurance Group, you can compare the effects of market volatilities on Nufarm Finance and Qbe Insurance and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Nufarm Finance with a short position of Qbe Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nufarm Finance and Qbe Insurance.
Diversification Opportunities for Nufarm Finance and Qbe Insurance
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nufarm and Qbe is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Nufarm Finance NZ and Qbe Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qbe Insurance Group and Nufarm Finance is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Nufarm Finance NZ are associated (or correlated) with Qbe Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qbe Insurance Group has no effect on the direction of Nufarm Finance i.e., Nufarm Finance and Qbe Insurance go up and down completely randomly.
Pair Corralation between Nufarm Finance and Qbe Insurance
Assuming the 90 days trading horizon Nufarm Finance is expected to generate 17.11 times less return on investment than Qbe Insurance. But when comparing it to its historical volatility, Nufarm Finance NZ is 2.9 times less risky than Qbe Insurance. It trades about 0.03 of its potential returns per unit of risk. Qbe Insurance Group is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,045 in Qbe Insurance Group on December 5, 2024 and sell it today you would earn a total of 100.00 from holding Qbe Insurance Group or generate 4.89% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Nufarm Finance NZ vs. Qbe Insurance Group
Performance |
Timeline |
Nufarm Finance NZ |
Qbe Insurance Group |
Nufarm Finance and Qbe Insurance Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nufarm Finance and Qbe Insurance
The main advantage of trading using opposite Nufarm Finance and Qbe Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nufarm Finance position performs unexpectedly, Qbe Insurance can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Qbe Insurance will offset losses from the drop in Qbe Insurance's long position.Nufarm Finance vs. 29Metals | Nufarm Finance vs. Global Data Centre | Nufarm Finance vs. Polymetals Resources | Nufarm Finance vs. EMvision Medical Devices |
Qbe Insurance vs. Computershare | Qbe Insurance vs. Resonance Health | Qbe Insurance vs. IDP Education | Qbe Insurance vs. Data3 |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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